Abstract

In June 2011, Statistics New Zealand released the first experimental series of unit labour cost statistics. Unit labour costs represent a direct link between productivity and the costs of labour used in production. Neo-classical economic theory suggests that real wages should equate to the marginal product of labour, and therefore wages should, in the long run, rise at the same rate as labour productivity. This theory is supported at the total economy level. At the sector- and industry-level there is some deviation from this theory but the differences are generally minimal.